Principles of Business Finance Assignment

Assignment Task

Open the file assessment stock selection.xls located in the Blackboard folder Module Assessments.

1. ManaFind your Student ID on row number 1 of the spreadsheet.

2. Under your designated column, Principles of Business you will find numbers from 1 to 7. Those numbers are in the rows of the specific stocks you will use during the assignment. Each student will work initially with 7 different stocks each.

3. The stock data is specified in the column A (ticker). You will gather historical stock data for those tickers.

4. From Yahoo Finance (mandatory source), gather 5 years of historical daily stock prices of all of your 7 stocks.

5. In row number 2 of the "assessment3_stock_selection.xls" file, under your Student ID, there is a number from to This indicates the number of daily returns you need to perform the assignment.

6. Calculate the daily returns for all your specific stocks (from the initial list of 7 assigned to you).

7. Determine the individual stocks' expected daily returns, variance, and standard deviation.

8. Build 7 different equally weighted portfolios (all stocks will have the same weight in the portfolio)

9. Determine the expected returns, variance, and standard deviation of all 7 different portfolios above, from A to G.

10. Graph the number of stocks in the portfolio vs. portfolio volatility, as an example of our textbook:

11. When working with the portfolio returns and variances, you will be faster if you perform the calculations in Excel using the functions SUMPRODUCT and MMULT, as we saw in class (4/19/23). However, if you don't want to use Excel, you're also welcome to perform all calculations manually, since you have all prerequisites to be enrolled in FIN3013 (MAT1053, MS1023). We saw in class the calculations using matrices, for portfolios expected returns, variances and standard deviations, in the case of portfolios with 2 stocks.

12. For the additional portfolios with more stocks, you should increase add more stocks to those matrices follows (3-asset portfolio): Let ; denote the share of wealth invested in asset i (i = A, B, C), and assume that all wealth is invested in the three assets so that TA+B+C = 1. The portfolio return, Rp,r, is the random variable The return on the portfolio using matrix notation.

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